Article

Some positives for business, but Budget ‘pulled its punches’

29 Oct 2018

Responding to today’s Budget, Stephen Martin, Director General of the Institute of Directors, said:

“The Chancellor showed he has listened to business leaders today with key reforms on business rates, the Apprenticeship Levy and the Annual Investment Allowance. But for all of the individual positive measures, including money for infrastructure upgrades, this was a Budget that pulled its punches.

“Going into this Budget, IoD members urged the Chancellor to prioritise help for Brexit preparations. It is not enough simply to announce a potential ‘no-deal Brexit budget’, businesses need to get ready now. While we hope the Chancellor’s confidence that there will be Brexit deal is well-placed, firms have to look at all possible scenarios and will be deeply disappointed to see no funds have been allocated to helping them map out potential outcomes.

“The Chancellor also acknowledged the scale of the productivity challenge, but most of the measures announced today were too small to even make it into the main speech.”

On Investment and Productivity:

“Businesses needed a shot in the arm to support investment in a period of unprecedented uncertainty, and the Chancellor delivered on that by raising the Annual Investment Allowance cap to £1million. This is a measure the IoD have been calling for for several years, and it should now bring some much-needed confidence for firms to make plans to boost their productivity. But, this Budget also missed a few tricks, particularly in incentivising small businesses to adopt the technology they need to drive up their performance.

“The initiatives to boost management skills and the diffusion of best business practices to SMEs, particularly through the Knowledge Transfer Partnerships scheme is a small but welcome step. However, the announcements were slim pickings given the substantive funding and focus we need to truly lift the UK’s long tail of underperforming firms.”

On Digital Services Tax:

“New taxes warrant a clear justification and careful implementation. The new proposed digital services tax may make political sense, but it has been announced with scant detail on how it will work apart from the revenue threshold, which is lower than even the EU has suggested. The Chancellor must proceed with extreme caution here.”

On Business Rates:

“Sky-high business rates have hampered the high street just as it attempts to compete with the growing stature of online retailers. The Chancellor’s announcement today, echoing our recommendations, should give many firms the breathing space to invest and develop new strategies. But this is ultimately a stop-gap measure at a time when the business rates system requires much wider reform. Support must also be extended to small firms outside the retail sector, and the fact that the tax also acts as a clear disincentive for businesses to invest in improving their properties must also be addressed.”

On the Apprenticeship levy:

“Low take up of apprentices by small businesses has been a quandary for the Government since the levy was introduced and employers will cheer the decision to reduce the co-investment rate for small firms. Coupled with the Chancellor’s recent announcement on levy transfers, this move should help to unblock the apprenticeship pipeline for non-levy payers. The onus should now be on businesses across the board to take advantage of these new measures when they come into force.

“However, technological and demographic changes will shift the goalposts for employers more than ever in the coming years, and the race to build genuine flexibility into the UK skills framework is far from won. Looking ahead, the aim should still be for the levy to do more heavy lifting. A wider training levy, one that acknowledges a much wider need for flexible provision on top of apprenticeships, should remain the goal for ministers as they plan beyond this parliament.”